This project will contribute to ongoing debates concerning changes in the Medicare program. By testing hypotheses predicting the pattern of adopting managed care plans in rural counties, we are testing the policy approach of relying on managed care and competitive markets to redress perceived financial problems in the program. The specific aims are: 1. Test hypotheses predicting the circumstances under which rural providers will take at least the initial steps to create Provider Sponsored Organizations (PSOs), or managed care plans under state authority. 2. Test hypotheses predicting expansion of Medicare managed care into some rural counties, versus others. 3. Develop hypotheses concerning the consequences of rural provider participation in Medicare managed care plans, focused on the following: * adoption of new management strategies in marketing finance, information systems, and negotiations; * processes developed for quality assurance; * changes in volume of uncompensated care; and * effects on local control and economic activities. The research design for this project has three components: l) an empirical summary of changes in enrollment in Medicare managed care plans, by type of county including rural remote, rural adjacent to metropolitan areas and metropolitan; 2) a survey of state informants (offices of rural health) repeated every six months, designed to measure and describe activities by rural providers in response to changes in Medicare policies; and 3) case studies of four communities the first year and six the second year, including site visits, to gather detailed information describing activities relevant to the third aim. The first component use data from HCFA, Interstudy, and the Area Resource File to test an econometric model that explains the dissemination of Medicare managed care as a function of changes in the payment, characteristics of the Medicare population (including number in the county) and the population and economic context present in the county. Results of this study will be shared annually with the policy community and others through the publication series of the Rural Policy Research Institute.